Let's look at some of the legal stuff. (This is not legal advice).
Maybe it’s the pandemic or maybe I’m at the age where people are separating from their partners, but friends are reporting that their friends and family members are splitting.
While splitsville is happening, there are assets and emotions. I’ve been told by a few people that they’re frustrated because the people in their life are walking away from money that could potentially come from splitting the assets.
Now, this isn't a newsletter about how to manage the emotions of a separation or divorce but this is a newsletter where I go and ask a lawyer some questions that might be of interest to people who are separating from their partners.
I spoke with Sherif Rizk, the principal lawyer and founder at Rizk Law Office, in Ottawa, Ontario. He has a focus on family law, separation and divorce, as well as wills and estates.
(While I did talk to Sherif, please do not treat this as legal or financial advice.)
Renée: Can you give me a definition of the difference between separation and divorce?
Sherif: Generally speaking, we're talking about the breakdown of a situation at home, whether that's legal marriage, or just common-law partners. A separation is when the parties seem to need at least some time apart from each other and it doesn't necessarily always result in a divorce. A separation can simply be people taking time to reassess how they want to move forward with a relationship.
It could also be out of necessity because if one of the parties is, unfortunately, violent towards the other, it becomes necessary to at least have them legally separated. Some people can stay legally separated for many, many years, even decades before finally deciding to pursue a divorce.
Divorce is essentially just the formalization of that separation by saying that these parties are no longer together. A legal divorce also permits one or both of the parties to remarry.
It can also have various benefits as far as filing taxes. Certain benefits that individuals may be entitled to if a party is legally divorced as opposed to separated. That could mean the termination of certain benefits that would normally be available to a legally married spouse.
So there's a lot of legal consequences as a result of divorce. A lot of people are mainly interested in it just for the remarriage aspect, but typically what we see is that people will go through a period of separation first, before deciding to go ahead with the divorce, so divorces are more so the formalization of long standing separation.
R: I do know, for example, the CRA prefers to be notified within a month of a divorce or if a partner has died. Whereas for separation, it's three months before you register your separation from your partner with the CRA.
S: Then you can file the tax returns as being legally separated once that status is recognized by CRA. In the legal context, it's sometimes necessary to do that also to establish that the parties have been separated for a certain or an extended period of time.
Assuming that there's no situation where there's no adultery or no cruelty or violence from one party towards the other, the parties would need to establish that they've been separated for at least one year before they can obtain legal divorce.
They can still go ahead and start the process of separating their finances and can even negotiate a separation agreement.
A part of the way to establish that separation is to show that the parties have filed tax returns as a separated individuals.
You don't necessarily have to wait until you're legally separated to start separating or to start dividing your assets. It can start as soon as technically the next day, especially if the parties know that this is it, we're not going to be reconciled.
R: Speaking of a separation agreement, is it better to let the courts decide or should you try and negotiate a separation agreement with your spouse?
S: Well, I'm going to give the prototypical lawyer answer and say it depends because separation agreements are often the most economically feasible way to divorce or to separate from your spouse.
It's essentially like a contract. It's the parties coming together and saying ‘that's it, we're done, we're going to separate our finances and once everybody gets what they're entitled to, we no longer have any sort of big picture obligations towards each other.’
Obviously, there can be certain exceptions to that like ongoing spousal support and child support obligations, but there should be some level of finality in terms of financial obligations, such as who's responsible for mortgage utilities, if there's any education expenses, etc.
It can be done sometimes, especially with the assistance of a trusted adviser, whether that's a lawyer or somebody else.
It's just really about assessing the power dynamics and relationships. So if the power dynamics are such that one person is very timid and non-confrontational, a separation agreement may not be the best outcome. They should still be considered and pursued if the circumstances allow for it, but you just have to be a lot more careful because one of the main things you want to keep in mind with a separation agreement, is that you don't want to be agreeing to something that you're not prepared to live with.
So if you're going to accept a certain amount for child support, and that amount is less than what you may be entitled to at law, you can agree to that if you'd like, but you also have to be prepared to say well, I may or may not get more in the future by signing this separation agreement. You have to be cognizant of that.
If there's a breakdown in the negotiations on the separation agreement, the intervention of the court becomes necessary. There's a reason why we have courts to deal with this. It's just that you want to just be careful to assess whether you're pursuing that option as a last resort. Mainly because the court process takes a long time, and there's a lot of disclosure requirements and there's a lot of formalities that have to be followed as well.
It makes sense to pursue those formalities if it’s really necessary to move your case forward, but if you can come to an agreement without it and the power dynamics are even enough that you can reach an agreement then that's usually recommended.
R: Can you change the terms of a separation agreement once it has been agreed upon?
S: You can and typically this is what we call a motion to change. One party goes to the court and asks the court's permission to amend a separation agreement entered into between the parties or even a court order that was issued by a court.
The idea there is that you're trying to effectively say there's been a material change in circumstances. This could be that more child support is necessary, and you have to provide that disclosure not only to the court, but to the other side.
Again, you want to demonstrate that you're only coming before the court as a last resort. You've tried to reach an agreement with the other side. One of the main reasons as to why a motion to change may be brought is first of all, if the child's expenses have gone up due to unanticipated expenses outside of the home, such as for extracurricular activities.
Income levels between the spouses have changed as well. So if let's say mom is the one with the kids and she's lost her job, and she needs some more financial support from her former partner in order to provide for the kids who are with her, that may be grounds for a motion to change.
Or it could be that the father, the one who's responsible for paying, they have lost his job and they're actually bringing a motion to change and say, ‘I'm not making as much money as I used to and I need an amendment to be made in order to just be able to keep up with the payments.’
This interview has been edited for length. The rest of the interview including spousal support is available in audio form.
Written by: Renee Sylvestre-Williams
Journalist, writer, strategist
Creator: The Budgette, a financial newsletter for single people. Now an audiobook!
Co-founder: The MidWeek 30: Life advice in uncertain times
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